Chinese Stocks Rise, Yen Gains on Inflation Data: Markets Wrap

By Pune Media On Nov 29, 2024 17

(Bloomberg) — The yen strengthened Friday as Tokyo inflation data exceeded estimates. Asian stocks fluctuated, while US equity futures climbed as investors prepared for cash trading to resume after the Thanksgiving holiday.

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Shares in Australia, Japan and South Korea fell, while benchmarks in mainland China and Hong Kong gained. A gauge of the region’s shares fluctuated. The moves followed an advance for European stocks on Thursday, with tech companies outperforming.

The yen rose to the highest level in more than a month against the greenback, strengthening past the key 150 level. The dollar slipped against major currencies with an index of greenback strength headed for its first weekly decline in two months. US Treasury yields fell as cash trading in Asia resumed after a break on Thursday.

The moves underscored the muted appetite for risk across global markets during a week that is typically marked by lower volumes due to the US holiday. Month-end positioning may also prompt some investors to rebalance portfolios after a record high for US stocks this week.

Gains for Japan’s currency were helped along by Tokyo inflation data that showed prices rose more than expected on a headline basis, but broadly in line with estimates once fresh food and energy were excluded. Swaps market pricing indicates a more than 60% chance the Bank of Japan will raise interest rates when it meets next month.

“The CPI report will probably strengthen the BOJ’s conviction that inflation momentum is building, with its 2% target looking increasing secure,” said Taro Kimura, an economist with Bloomberg Economics.

Japan may also delay a decision on raising taxes to help cover rising defense spending, a senior ruling coalition official said.

Australian bond yields rose after Reserve Bank Governor Michele Bullock said core inflation remains too high and pushed back on expectations of near-term rate cuts. The Australian dollar was slightly stronger against the greenback Friday.

Elsewhere in currency markets, Brazil’s real tumbled to a record low on disappointment over a government plan to cut spending, while Mexico’s peso rallied amid thin trading due to the US holiday.

European Stocks

In Europe, stocks snapped two days of declines, with technology leading the advance amid hopes that US curbs on chip equipment sales to China may prove lighter than feared. The US is considering measures on sales of semiconductor equipment and AI memory chips to China that would stop short of stricter limits previously under discussion, Bloomberg News reported.

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Political turmoil in France weighed on the nation’s stocks and bonds. The yields on benchmark French bonds traded near 3%, briefly on par with those of Greece for the first time on record. The nation’s stocks are set for their worst underperformance against European peers since 2010 as a budget standoff threatens to topple the government.

“The problem with France is it’s one of the largest issuers in Europe and now you’ve got a bit of a buyers’ strike,” Jordan Rochester, head of macro strategy at Mizuho International, said in an interview with Bloomberg TV. “Our head of EGB trading was just in France recently talking to investors, and their interest in buying OATs was extremely low. You’ve got other options, Italy and Spain, and their data’s actually fantastic.”

Some investors are also recalibrating their expectations for US inflation and future Federal Reserve interest rate cuts following data released earlier in the week.

In PCE data released earlier this week, “core services came out quite strong,” said Kevin Thozet, a member of the investment committee at Carmignac. “We are not heading for double-digit inflation but the disinflationary trend is stalling. The result of the US elections could prolong this cycle with tax cuts.”

In commodities, oil inched higher, with the market now looking ahead to an upcoming OPEC+ meeting that has been delayed until Dec. 5. Gold rose for a fourth session.

Key events this week:

Eurozone CPI, Friday
ECB releases consumer expectations survey for October, Friday
“Black Friday,” the traditional start of the US holiday shopping rush

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 10:57 a.m. Tokyo time
Japan’s Topix fell 0.4%
Australia’s S&P/ASX 200 fell 0.4%
Hong Kong’s Hang Seng was little changed
The Shanghai Composite rose 0.1%
Euro Stoxx 50 futures fell 0.2%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%
The euro was little changed at $1.0558
The Japanese yen rose 1% to 150.02 per dollar
The offshore yuan rose 0.2% to 7.2342 per dollar

Cryptocurrencies

Bitcoin rose 0.9% to $95,964.92
Ether fell 0.2% to $3,565.85

Bonds

The yield on 10-year Treasuries declined two basis points to 4.24%
Japan’s 10-year yield advanced 1.5 basis points to 1.060%
Australia’s 10-year yield advanced one basis point to 4.37%

Commodities

West Texas Intermediate crude rose 0.3% to $68.96 a barrel
Spot gold rose 0.3% to $2,644.94 an ounce

This story was produced with the assistance of Bloomberg Automation.